Ludwig Fadenauer

Ludwig Fadenauer asked about Vestis Corporation's network rationalization plans, specifically regarding capacity consolidation and the amount of capacity expected to be removed. He also sought clarification on non-recurring expenses within the fiscal 2026 adjusted EBITDA guidance and the expected timing of restructuring costs.

Answer

President and CEO Jim Barber explained that network optimization prioritizes improving plant performance before consolidation, with the majority of 2026 savings coming from internal plant optimization. EVP and CFO Kelly Janzen clarified that the $25 million-$30 million restructuring costs are excluded from adjusted EBITDA guidance. She detailed the calculation of the $300 million adjusted EBITDA midpoint, factoring in a normalized Q4 exit rate and $40 million in-year savings from the transformation plan, assuming stable revenue and strategic pricing initiatives.

Ludwig Fadenauer from William Blair asked about Vestis's plans for network rationalization, specifically if it involves consolidating capacity in certain regions, and requested details on the amount of capacity planned for streamlining operations. He also sought clarification on non-recurring expenses embedded in the fiscal 2026 adjusted EBITDA guidance and the expected timing of the $25 million-$30 million restructuring costs.

Answer

Jim Barber, President and CEO, explained that the initial focus is on optimizing existing plants before consolidating, as combining underperforming assets is not effective. He noted that while some isolated moves have occurred, major network optimization will come longer term after pre-work is done. Kelly Janzen, EVP and CFO, clarified that the $25 million-$30 million restructuring costs are not included in adjusted EBITDA guidance as they are added back. She detailed the calculation for the $300 million adjusted EBITDA midpoint, which includes $40 million of in-year savings from the $75 million annualized plan, and assumes relatively stable revenue driven by strategic pricing and increased penetration with existing customers.